Jamaica Broilers Group Limited. Financial Statements 2 May 2015

Transcription

1 Jamaica Broilers Group Limited Financial Statements

2 Index Page Independent Auditor s Report to the Members Statutory Financial Statements Group statement of comprehensive income 1 Group balance sheet 2 Group statement of changes in stockholders equity 3 Group statement of cash flows 4 5 Company statement of comprehensive income 6 Company balance sheet 7 Company statement of changes in stockholders equity 8 Company statement of cash flows 9-10 Notes to the financial statements 11-83

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5 Group Statement of Comprehensive Income Year ended Page 1 Note Restated Revenue 34,570,050 30,851,350 Cost of sales (26,548,665) (24,343,646) Gross Profit 8,021,385 6,507,704 Other income/gains 6 174, ,304 Distribution costs (1,033,495) (863,079) Administration and other expenses (5,041,235) (4,482,845) Operating Profit 2,120,772 1,365,084 Finance income 9 145, ,088 Finance costs 9 (704,701) (592,076) Profit before Taxation 1,561,852 1,073,096 Taxation 10 (552,198) (153,987) Net Profit 1,009, ,109 Other Comprehensive Income, net of taxes - Item that will not be reclassified to profit or loss - Re-measurements of post-employment/pension benefits -, net of taxes (112,225) (103,750) Item that will be reclassified to profit or loss - Exchange differences on translating foreign operations 155, ,800 Total other comprehensive income 43, ,050 Total Comprehensive Income 1,053,053 1,133,159 Net Profit Attributable to: Stockholders of the company 11 1,036, ,283 Non-controlling interests 17 (26,514) (38,174) Total Comprehensive Income Attributable to: 1,009, ,109 Stockholders of the company 1,078,675 1,167,079 Non-controlling interests 17 (25,622) (33,920) 1,053,053 1,133,159 Cents Cents Earnings per Stock Unit

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7 Group Statement of Changes in Stockholders Equity Year ended Page 3 Note Attributable to the Company s Stockholders Number of Shares Share Capital Capital Reserve Retained Earnings Noncontrolling Interests Total Equity 000 Balance at 27 April ,199, ,137 1,432,828 7,384,081 (55,877) 9,526,169 Remeasurements of pension asset/obligation, net of taxes (103,750) - (103,750) Exchange differences on translating foreign operations ,546-4, ,800 Total other comprehensive income ,546 (103,750) 4, ,050 Net profit ,283 (38,174) 919,109 Total comprehensive income , ,533 (33,920) 1,133,159 Dividends (191,884) - (191,884) Additional investment/loan conversion ,774 53,774 Total transactions with owners (191,884) 53,774 (138,110) Movement during the year , ,649 19, ,049 Balance at 1,199, ,137 1,746,374 8,045,730 (36,023) 10,521,218 Remeasurements of pension asset/obligation, net of taxes (112,225) - (112,225) Exchange differences on translating foreign operations , ,624 Total other comprehensive income ,732 (112,225) ,399 Net profit ,036,168 (26,514) 1,009,654 Total comprehensive income , ,943 (25,622) 1,053,053 Dividends (203,877) - (203,877) Additional investment ,020 26,020 Transfer from capital reserves (50,925) 50, Total transactions with owners - - (50,925) (152,952) 26,020 (177,857) Movement during the year , , ,196 Balance at 1,199, ,137 1,850,181 8,816,721 (35,625) 11,396,414

8 Group Statement of Cash Flows Year ended Page 4 Note Cash Flows from Operating Activities Net profit 1,009, ,109 Adjustments for: Depreciation , ,509 Amortisation 14 90,517 70,209 Property, plant and equipment write-off 13 6,314 8,332 Property, plant and equipment adjustment 13 (2,741) - Loss/(gain) on disposal of property, plant and equipment 6 5,702 (18,346) Loss on disposal of intangible assets 55 - Loss on disposal of subsidiaries 33 1,323 - Investment write-off 3,566 - Impairment of investment 31,217 - Fair value loss on investment property Fair value loss/(gain) on financial assets at fair value through profit or loss 6 28,248 (3,227) Changes in post-employment benefits (150,800) 30,400 Taxation expense , ,987 Interest income 9 (23,715) (18,368) Unrealised foreign exchange losses 60,567 11,069 Interest expense 9 664, ,333 3,008,644 2,246,897 Changes in operating assets and liabilities: Inventories (264,354) (708,622) Biological assets (354,912) (450,425) Receivables (22,489) (463,276) Payables 761, ,002 Financial assets at fair value through profit or loss (64,684) 308,229 Translation gain on working capital of foreign subsidiaries (66,382) (161,495) 2,997,210 1,547,310 Taxation paid (195,420) (131,195) Cash provided by operating activities 2,801,790 1,416,115

9 Group Statement of Cash Flows (Continued) Year ended Page 5 Note Cash Flows from Operating Activities (Page 4) 2,801,790 1,416,115 Cash Flows from Investing Activities Acquisition of subsidiaries, net of cash acquired 32 - (1,292,941) Purchase of property, plant and equipment 13 (1,060,948) (1,131,891) Proceeds from disposal of property, plant and equipment 8,094 36,208 Purchase of intangible assets 14 (3,615) (4,726) Loan repayments received 6,335 - Proceeds from disposal of subsidiaries 33 88,103 - Interest received 23,715 18,368 Cash used in investing activities (938,316) (2,374,982) Cash Flows from Financing Activities Long term loans repaid (1,342,756) (1,918,794) Long term loans received 1,455,094 2,679,839 Additional investments from non-controlling interest 17 26,020 10,131 Interest paid (665,643) (468,138) Dividends paid (203,877) (191,884) Cash (used in)/provided by financing activities (731,162) 111,154 Effect of changes in exchange rates on cash and cash equivalents 21,617 36,554 Increase/(decrease) in cash and cash equivalents 1,153,929 (811,159) Cash and cash equivalents at beginning of year 514,628 1,325,787 CASH AND CASH EQUIVALENTS AT END OF YEAR 24 1,668, ,628 Non-cash additions during the year amounted to $8,867,000. These amounts were transferred from inventory.

10 Company Statement of Comprehensive Income Year ended Page 6 Restated 3May Note Revenue 26,732,162 25,286,157 Cost of sales (21,306,394) (20,650,066) Gross Profit 5,425,768 4,636,091 Other income/gains 6 1,469, ,846 Distribution costs (806,177) (621,233) Administration and other expenses (3,578,088) (3,454,412) Operating Profit 2,511,117 1,493,292 Finance income 9 270, ,289 Finance costs 9 (558,023) (529,334) Profit before Taxation 2,223,123 1,367,247 Taxation 10 (291,648) (61,186) Net Profit 1,931,475 1,306,061 Other Comprehensive Income, net of taxes - Item that will not be reclassified to profit or loss - Re-measurements of post-employment benefits (100,275) (99,450) TOTAL COMPREHENSIVE INCOME 1,831,200 1,206,611

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12 Company Statement of Changes in Stockholders Equity Year ended Page 8 Number of Shares Share Capital Capital Reserve Retained Earnings Total Note 000 Balance at 27 April ,199, , ,201 5,130,019 6,028,357 Remeasurement of pension asset/obligation, net of taxes (99,450) (99,450) Total other comprehensive income (99,450) (99,450) Net profit, as restated ,306,061 1,306,061 Total comprehensive income ,206,611 1,206,611 Dividends (191,884) (191,884) Movement during the year ,014,727 1,014,727 Balance at 1,199, , ,201 6,144,746 7,043,084 Remeasurement of pension asset/obligation, net of taxes (100,275) (100,275) Total other comprehensive income (100,275) (100,275) Net profit ,931,475 1,931,475 Total comprehensive income ,831,200 1,831,200 Dividends (203,877) (203,877) Movement during the year ,627,323 1,627,323 Balance at 1,199, , ,201 7,772,069 8,670,407

13 Company Statement of Cash Flows Year ended Page 9 Restated Note Cash Flows from Operating Activities Net profit 1,931,475 1,306,061 Adjustments for: Depreciation , ,315 Amortisation 14 22,154 19,707 Property, plant and equipment write off 6,314 8,332 Property, plant and equipment adjustment (2,741) - Gain on disposal of property, plant and equipment 6 (561) (3,561) Investment write off 3,566 - Changes in post-employment benefits (134,700) 27,400 Taxation expense ,648 61,186 Interest income 6,9 (146,209) (121,568) Dividend income 6 (1,224,120) (855,458) Unrealised foreign exchange gains (132,251) (167,983) Interest expense 9 545, ,712 1,447, ,143 Changes in operating assets and liabilities: Inventories (124,543) (777,941) Biological assets 128,807 (162,120) Receivables 154,152 (185,783) Subsidiaries (625,495) (95,946) Payables 609, ,954 1,590, ,307 Taxation paid (138,133) (90,806) Cash provided by operating activities 1,451, ,501

14 Company Statement of Cash Flows (Continued) Year ended Page 10 Restated Note Cash Flows from Operating Activities (Page 9) 1,451, ,501 Cash Flows from Investing Activities Acquisition of subsidiary 32 - (111,160) Disposal of subsidiaries 32,344 - Loan repayments received 123, ,587 Loans issued - (1,139,688) Purchase of property, plant and equipment 13 (624,373) (972,189) Proceeds from disposal of property, plant and equipment 3,917 3,561 Purchase of intangible asset 14 (3,615) (559) Interest received 131, ,568 Dividend received 1,224, ,458 Cash provided by/(used in) investing activities 887,533 (943,422) Cash Flows from Financing Activities Long term loans repaid (1,017,737) (1,661,856) Long term loans received 675,000 2,210,000 Interest paid (551,275) (479,517) Dividends paid (203,877) (191,884) Cash used in financing activities (1,097,889) (123,257) Effect of changes in exchange rates on cash and cash equivalents 21,617 37,984 Increase/(decrease) in cash and cash equivalents 1,263,189 (673,194) Cash and cash equivalents at beginning of year 183, ,548 CASH AND CASH EQUIVALENTS AT END OF YEAR 24 1,446, ,354 Non-cash additions during the year amounted to $8,867,000. These amounts were transferred from inventory.

15 Page Identification Jamaica Broilers Group Limited (the company) is a company limited by shares, incorporated and domiciled in Jamaica. Its registered office is located at Content, McCooks Pen, St. Catherine. The company was incorporated in The principal activities of the company and its subsidiaries include the production and distribution of poultry products, animal feeds and agricultural items (Note 2(b)). In addition, one of the company s subsidiaries, JB Ethanol Limited contractually processes fuel products on behalf of customers for a fee. The company s subsidiaries together with the company are referred to as the Group. The company is listed on the Jamaica Stock Exchange. 2. Summary of Significant Accounting Policies The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. (a) Basis of preparation The consolidated financial statements of Jamaica Broilers Group Limited have been prepared in accordance with International Financial Reporting Standards (IFRS) under the historical cost convention, as modified by the revaluation of biological assets and certain financial assets. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group s accounting policies. Although these estimates are based on management s best knowledge of current events and action, actual results could differ from those estimates. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 4. Certain new standards, interpretations and amendments to existing standards have been published that became effective during the current financial year. has assessed the relevance of all such new standards, interpretations and amendments and has put into effect the following IFRS, which are immediately relevant to its operations. Amendment to IAS 32, Financial instruments: Presentation (effective for annual periods beginning on or after 1 January ) on offsetting financial assets and financial liabilities. This amendment clarifies that the right of set-off must not be contingent on a future event. It must also be legally enforceable for all counterparties in the normal course of business, as well as in the event of default, insolvency or bankruptcy. The amendment also considers settlement mechanisms. The amendment did not have a significant effect on the group financial statements. Amendments to IAS 36, Impairment of assets, (effective for annual periods beginning on or after 1 January ) on the recoverable amount disclosures for non-financial assets. This amendment removed certain disclosures of the recoverable amount of CGUs which had been included in IAS 36 by the issue of IFRS 13. The adoption of this amendment did not have a significant impact on the financial statements. IFRIC 21, Levies, (effective for annual periods beginning on or after 1 January ) sets out the accounting for an obligation to pay a levy if that liability is within the scope of IAS 37 Provisions. The interpretation addresses what the obligating event is that gives rise to pay a levy and when a liability should be recognised. is not currently subjected to significant levies so the impact on the Group is not material.

16 Page Summary of Significant Accounting Policies (Continued) (a) Basis of preparation (continued) Standards, interpretations and amendments to published standards that are not yet effective and have not been early adopted by the Group has concluded that the following standards which are published but not yet effective are relevant to its operations and will impact the Group s accounting policies and financial disclosures as discussed below. These standards and amendments to existing standards are mandatory for the Group s accounting periods beginning after or later periods, but the Group has not early adopted them: Amendment to IAS 1, Disclosure initiative. These amendments clarify the existing requirements of IAS 1 and provide additional assistance to apply judgement when meeting the presentation and disclosure requirements in IFRS. The amendment does not affect recognition and measurement and is effective for accounting periods beginning on or after 1 January The amendment is not expected to have a significant impact on the financial statements. IFRS 9, Financial Instruments (effective for annual periods beginning on or after 1 January 2018). This standard specifies how an entity should classify and measure financial instruments, including some hybrid contracts. It requires all financial assets to be classified on the basis of the entity s business model for managing the financial assets and the contractual cash flow characteristics of the financial asset; initially measured at fair value plus, in the case of a financial asset not at fair value through profit or loss, particular transaction costs; and subsequently measured at amortised cost or fair value. These requirements improve and simplify the approach for classification and measurement of financial assets compared with the requirements of IAS 39. They apply a consistent approach to classifying financial assets and replace the four categories of financial assets in IAS 39, each of which had its own classification criteria. For financial liabilities, the standard retains most of the IAS 39 requirements. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity s own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch. There has been no significant change in the recognition and measurement of financial liabilities carried at amortised cost from that obtained under IAS 39.While adoption of IFRS 9 is mandatory from 1 January 2018, earlier adoption is permitted. is considering the implications of the standard, the impact on the Group and the timing of its adoption. IFRS 15, 'Revenue from Contracts with Customers'. The IASB has published its new revenue standard, IFRS 15 'Revenue from Contracts with Customers'. The U.S. Financial Accounting Standards Board (FASB) has concurrently published its equivalent revenue standard which is the result of a convergence project between the two Boards. IFRS 15 applies to nearly all contracts with customers: the main exceptions are leases, financial instruments and insurance contracts. It specifies how and when an entity will recognise revenue. It also requires entities to provide more informative, relevant disclosures. The standard supersedes IAS 18, 'Revenue', IAS 11, 'Construction Contracts' and a number of revenue-related interpretations. Application of the standard is mandatory for accounting periods beginning on or after 1 January is assessing the impact of future adoption of the standard. IAS 19 (Amendment) Defined Benefit Plans: Employee Contributions, (effective for annual periods beginning 1 July ). The amendment allows entities to recognise employee contributions as a reduction in the service cost in the period in which the related employee service is rendered, instead of attributing the contributions to the periods of service, if the amount of the employee contributions is independent of the number of years of service. will apply the standard effective but does not expect any significant impact from its adoption.

17 Page Summary of Significant Accounting Policies (Continued) (a) Basis of preparation (continued) Standards, interpretations and amendments to published standards that are not yet effective and have not been early adopted by the Group (Continued) IASB Annual Improvements - The IASB annual improvements project for the cycle resulted in amendments to the following standards which may be relevant to the Group s operations. These amendments are effective for the accounting periods beginning on or after 1 July. is assessing the impact of future adoption of the amendments. IFRS 8, Operating Segments. The standard is amended to require disclosure of the judgements made by management in aggregating operating segments. This includes a description of the segments which have been aggregated and the economic indicators which have been assessed in determining that the aggregated segments share similar economic characteristics. The standard is further amended to require a reconciliation of segment assets to the entity s assets when segment assets are reported. IFRS 13, Fair value measurements. When IFRS 13 was published, certain paragraphs of IAS 39 were deleted as consequential amendments. This led to a concern that entities no longer had the ability to measure short-term receivables and payables at invoice amounts where the impact of not discounting is immaterial. The IASB has amended the basis for conclusions of IFRS 13 to clarify that it did not intend to remove the ability to measure short-term receivables and payables at invoice amounts in such cases. IAS 16, Property, plant and equipment and IAS 38, Intangible assets. Both standards are amended to clarify how the gross carrying amount and the accumulated depreciation are treated where an entity uses the revaluation model. The carrying amount of the asset is to be restated to the revalued amount. The split between gross carrying amount and accumulated depreciation is treated in one of two ways. The gross carrying amount may restated in a manner consistent with the revaluation of the carrying amount, and the accumulated depreciation is adjusted to equal the difference between the gross carrying amount and the carrying amount after taking into account accumulated impairment losses. Alternatively, the accumulated depreciation may be eliminated against the gross carrying amount of the asset. IASB Annual Improvements - The IASB annual improvements project for the cycle resulted in amendments to the following standards which may be relevant to the Group s operations. These amendments are effective for the accounting periods beginning on or after 1 January is assessing the impact of future adoption of the amendments. IFRS 7, Financial instruments: Disclosures. The amendment clarifies, among other things, that the additional disclosure required by the amendments to IFRS 7, Disclosure Offsetting financial assets and financial liabilities is not specifically required for all interim periods, unless required by IAS 34. IAS 19 (Revised), Employee benefits. The amendment clarifies that, when determining the discount rate for post-employment benefit obligations, it is the currency that the liabilities are denominated in that is important, and not the country where they arise. The assessment of whether there is a deep market in high-quality corporate bonds or not is based on corporate bonds in that currency, and not corporate bonds in a particular country. Similarly, where there is no deep market in high-quality corporate bonds in that currency, government bonds in the relevant currency should be used.

18 Page Summary of Significant Accounting Policies (Continued) (a) Basis of preparation (continued) Standards, interpretations and amendments to published standards that are not yet effective and have not been early adopted by the Group (Continued) IASB Annual Improvements - IAS 34, Interim financial reporting. The amendment clarifies what is meant by the reference in the standard to information disclosed elsewhere in the interim financial report. The amendment further amends IAS 34 to require a cross-reference from the interim financial statements to the location of that information. There are no other IFRS or IFRIC interpretations that are published but not yet effective that would be expected to have an impact on the accounting policies or financial disclosures of the Group. (b) Consolidation (i) Subsidiaries Subsidiaries are all entities (including structured entities) over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the group controls another entity. also assesses existence of control where it does not have more than 50% of the voting power but is able to govern the financial and operating policies by virtue of de-facto control. De-facto control may arise in circumstances where the size of the Group s voting rights relative to the size and dispersion of holdings of other shareholders give the Group the power to govern the financial and operating policies, etc. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. recognises any non-controlling interest in the acquiree on an acquisition- by-acquisition basis, either at fair value or at the non-controlling interest s proportionate share of the recognised amounts of acquiree s identifiable net assets. If a business combination is achieved in stages, the acquisition date carrying value of the acquirer s previously held equity interest in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognised in profit or loss. Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IAS 39 either in profit or loss or as a change to other comprehensive income. Contingent consideration that is classified as equity is not remeasured, and its subsequent settlement is accounted for within equity.

19 Page Summary of Significant Accounting Policies (Continued) (b) Consolidation (continued) (i) Subsidiaries (continued) Goodwill is recorded at cost and represents the excess of the value of consideration paid over the Group s interest in net fair value of the identifiable assets, liabilities and contingent liabilities of the acquire and the fair value of the non-controlling interest in the acquire. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose, identified according to operating segment. Inter-company transactions, balances, income and expenses on transactions between group companies are eliminated. Profits and losses resulting from inter-company transactions that are recognised in assets are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. Investments in subsidiaries are accounted for at cost less impairment. Cost is adjusted to reflect changes in consideration arising from contingent consideration amendments. Cost also includes direct attributable costs of investment.

20 Page Summary of Significant Accounting Policies (Continued) (b) Consolidation (continued) (i) Subsidiaries (continued) The consolidated financial statements include the financial statements of the company and its operating divisions and subsidiaries as follows: Resident in Jamaica: Operating divisions Best Dressed Chicken (including Best Dressed Feed Mill and Best Dressed Further Processing Facility) Best Dressed Foods Hi-Pro Ace Principal Activities % Ownership by Company at % Ownership by Group at Poultry and pullet production and feed milling, processing and sale of salted products/pickled products Distributors of chicken, beef, fish and imported of protein products Feed sales, suppliers of farming equipment and supplies Subsidiaries Best Dressed Chicken Limited Non-trading Content Agricultural Products Limited Property rental Energy Associates Limited and its subsidiary: Holding and investment company CE Jamaica Inc. Non- trading EAL/ERI Co-generation Partners, LP Generation of electricity ERI Jam, LLC (subsidiary of ERI Services (St. Lucia) Limited) Non-trading Hamilton Smoke House Limited Non-trading JB Ethanol Limited (subsidiary of ERI Services (St. Lucia) Limited) Fuel processing Jabexco Limited Non-trading Jamaica Eggs Limited Non-trading Jamaica Poultry Breeders Limited Fertile egg production and cattle rearing for sale Levy Industries Limited Property rental Master Blend Feeds Limited Property rental JB. Trading Limited Non-trading Trafalgar Agriculture Development Limited Non-trading S.G Developments Limited Non-trading Resident outside of Jamaica: Atlantic United Insurance Company Limited, St.Lucia Captive insurance ERI Services (St. Lucia) Limited, St. Lucia Holding company International Poultry Breeders, Inc, Arkansas USA and its subsidiaries Holding company England Packing Company Inc Arkansas. USA Holding company England Transport Company Inc, USA Transportation England Farms Inc. USA Fertile egg production Haiti Broilers, S.A. Production and sale of broilers, layer pullets, and its subsidiary: table eggs and animal feeds T&S Rice S.A., Haiti Lessee of production facilities in Haiti - 68 Wincorp Air Services Limited, St.Lucia Aircraft ownership International Poultry Breeders LLC Georgia, 90 U.S.A. Fertile egg production 90 Jabexco Cayman Limited, Cayman Non-trading Wincorp International, Inc., U.S.A. and its subsidiary: Procurers and distributors of agricultural and industrial supplies Consolidated Freight and Shipping, Inc. Ocean freight consolidator - 100

21 Page Summary of Significant Accounting Policies (Continued) (b) Consolidation (continued) (ii) Changes in ownership interests in subsidiaries without change of control Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions, that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity. (iii) Disposal of subsidiaries When the Group ceases to have control any retained interest in the entity is remeasured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss. (iv) Changes in year During the year the Group disposed of two of its subsidiaries, Aquaculture Jamaica Limited and Aqualapia Limited (Note 33). (c) Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker is the President and Chief Executive Officer. (d) Revenue recognition Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Group s activities. Revenue is shown net of General Consumption Tax, returns, discounts and after eliminating sales within the Group. recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Group and specific criteria have been met in relation to the Group s activities as described below: Sales of goods Sales are recognised upon delivery of products, customer acceptance of the products and collectibility of the related receivables is reasonably assured. Sales of services Fees and commission income fees arising from tolling and insurances contracts are generally recognised on an accrual basis when the service has been provided. Dividend income Dividend income is recognised when the right to receive payment is established.

22 Page Summary of Significant Accounting Policies (Continued) (d) Revenue recognition (continued) Interest income Interest income is recognised in profit or loss for all interest bearing instruments on an accrual basis using the effective yield method based on the actual purchase price. Interest income includes coupons earned on fixed income investments and accrued discount on other discounted instruments. (e) Foreign currency translation (i) Functional and presentation currency Items included in the financial statements of each of the Group s entities are measured using the currency of the primary economic environment in which the entity operates ( the functional currency ). The consolidated financial statements are presented in Jamaican dollars, which is the Group s presentation currency and the company s functional currency. (ii) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except when deferred in other comprehensive income. Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the income statement in other income. Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the profit or loss, except when deferred in equity as gains or losses from qualifying cash flow hedging instruments. All foreign exchange gains and losses recognised in the profit or loss are presented net in the profit or loss within the corresponding item. Foreign exchange gains and losses on other comprehensive income items are presented in other comprehensive income within the corresponding item. Changes in the fair value of monetary securities denominated in foreign currency classified as available-for-sale are analysed between translation differences resulting from changes in the amortised cost of the security and other changes in the carrying amount of the security. Translation differences related to changes in amortised cost are recognised in profit or loss, and other changes in carrying amount are recognised in stockholders equity. Translation differences on non-monetary financial instruments, such as equities held at fair value through profit or loss, are reported as part of the fair value gain or loss. Translation differences on non-monetary financial instruments, such as equities classified as available-for-sale financial assets, are included in the capital reserve in stockholders equity.

23 Page Summary of Significant Accounting Policies (Continued) (e) Foreign currency translation (continued) (iii) Group companies The results and financial position of all the group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: (a) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet; (b) income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and (c) all resulting exchange differences are recognised in other comprehensive income. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. Exchange differences arising are recognised in other comprehensive income. (f) Income taxes Taxation expense in profit or loss comprises current and deferred tax charges. (i) Current taxation Current tax charges are based on taxable profit for the year, which differs from the profit before tax reported because it excludes items that are taxable or deductible in other years, and items that are never taxable or deductible. s liability for current tax is calculated at tax rates that have been enacted at balance sheet date. (ii) Deferred taxation Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability settled. Deferred tax assets are recognised where it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred income tax is provided on temporary differences arising from investments in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the difference will not reverse in the foreseeable future. The tax effects of income tax losses available for carry-forward are recognised as an asset when it is probable that future taxable profits will be available against which these losses can be utilised.

24 Page Summary of Significant Accounting Policies (Continued) (g) Property, plant and equipment Property, plant and equipment are stated at historical cost, less accumulated depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Land is carried at cost and is not depreciated. Subsequent costs are included in the asset s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. Depreciation is calculated on the straight line basis at such rates as will write off the carrying value of the assets over the period of their estimated useful lives. The expected useful lives are as follows: Freehold buildings Leasehold property Plant, machinery and equipment Furniture and fixtures Motor vehicles years Life of lease 4 33 years 10 years 3 5 years The assets residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset s carrying amount is written down immediately to its recoverable amount if the asset s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals of property, plant and equipment are determined by comparing the proceeds with the carrying amount and are recognised in other income in profit or loss. Repairs and maintenance expenditure are charged to profit or loss during the financial period in which they are incurred.

25 Page Summary of Significant Accounting Policies (Continued) (h) Intangible assets (i) Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Group s share of the net identifiable assets of the acquired subsidiary at the acquisition date. Goodwill on acquisition of subsidiaries is included in intangible assets. Separately recognised goodwill is tested for impairment annually and carried at cost less accumulated impairment. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. An excess of the identifiable net assets acquired over the acquisition cost is treated as negative goodwill. Negative goodwill related to expected post-acquisition losses is taken to profit or loss during the period the future losses are recognised. Negative goodwill which does not relate to expected future losses is recognised as income immediately. For the purposes of impairment testing goodwill acquired in a business combination is assigned to cash generating units that is expected to benefit from the synergies of the combination. (ii) Computer software Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised over the estimated useful life of ten years for software on a straight line basis. Amortisation is recognised in the profit or loss in administration and other expenses. Costs associated with developing or maintaining computer software programmes are recognised as an expense as incurred. (iii) Brands Brands are recorded at historical cost. They are acquired in a business combination and are recognised at the fair value at acquisition date. These costs have a finite useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight line method over their expected useful lives of 7 years. (iv) Customer relationships Customer relationships are recorded at cost and represent the value of the consideration paid to acquire customer contract and the related customer relationships. These costs are amortised over the estimated useful lives of the relationships, of 10 years. (v) Non-compete agreements Non-compete agreements are recorded at cost and represent the attributed consideration paid to acquire them. These costs are amortised over the estimated useful lives of the non-compete agreements which is between 2 to 10 years. (vi) Product formulation Product formulation are recorded at cost and represent the value of the consideration paid to have rights to the use of recipes and formulations. These costs are amortised over their estimated useful lives of 20 years.

26 Page Summary of Significant Accounting Policies (Continued) (i) (j) Investment properties Investment properties are held for long-term rental yields and are not occupied by the Group. Investment properties are treated as long-term investments and are carried at deemed cost less accumulated depreciation. Freehold buildings are depreciated on the straight line basis over their expected useful lives of 60 years. Impairment of non-financial assets Property, plant and equipment and other non-current assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount, which is the greater of an asset s net selling price and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows. Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date. (k) Financial assets classifies its financial assets into the following categories: financial assets at fair value through profit or loss, loans and receivables and available-for-sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its investments at initial recognition and re-evaluates this designation at every reporting date. (i) Financial assets at fair value through profit or loss This category has two sub-categories: financial assets held for trading, and those designated as fair value through profit or loss at inception. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by management. Assets in this category are classified as current assets if they are either held for trading or are expected to be realised within 12 months of the balance sheet date. (ii) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date, which are classified as non-current assets. Loans and receivables are classified as trade and other receivables in the balance sheet. (iii) Available-for sale financial assets Available-for-sale investments are non-derivative financial assets intended to be held for an indefinite period of time, which may be sold in response to needs for liquidity or changes in interest rates, exchange rates or equity prices. Available-for-sale investments are initially recognised at fair value, which is the cash consideration including any transaction costs. Purchases and sales of available-for-sale financial assets are recognised at the trade date the date on which the Group commits the purchase or sell the asset. Loans and receivables are recognised when cash is advanced to the borrowers.

27 Page Summary of Significant Accounting Policies (Continued) (k) Financial assets (continued) Subsequent to initial recognition at cost, financial assets at fair value through profit or loss and availablefor-sale financial assets are carried at fair value. Loans and receivables financial assets are carried at amortised cost using the effective interest method. Gains and losses arising from changes in the fair value of available-for-sale financial assets are recognised directly in other comprehensive income, until the financial asset is derecognised or impaired. At this time, the cumulative gain or loss previously recognised in other comprehensive income is recognised in profit or loss. However, interest calculated using the effective interest method and foreign currency gains and losses on monetary assets classified as available for sale are recognised in the profit or loss. Dividends on available-for-sale equity instruments are recognised in profit or loss when the Group s right to receive payment is established. The fair values of quoted investments in active markets are based on current bid prices. Unquoted securities are recorded initially at cost. They are subsequently measured at fair value. Where fair value cannot be measured reliably they are measured at cost less impairment. Financial assets are derecognised when the right to received cash flows from the financial assets have expired or where the Group has transferred substantially all risks and rewards of ownership. Financial liabilities are derecognised when they are extinguished, that is, when the obligation is discharged, cancelled or expires. The group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset and that loss event has an impact on the estimated cash flows of the financial asset or financial group of assets that can be reliably estimated. For loans and receivables category, the amount of the loss is measured as the difference between the asset s carrying value amount and the present value of estimated cash flows discounted at the financial asset s original effective interest rate. The carrying amount is reduced and the amount of the loss is recognised in the consolidated profit or loss. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the reversal of the previously recognised impairment loss is recognised in the consolidated profit or loss. For equity investments, a significant or prolonged decline in the fair value of the security below its costs is also evidence that the assets are impaired. If any such assets exists the cumulative loss is removed from the equity and recognised in the profit or loss. Impairment losses recognised in the consolidated profit or loss on equity instruments are not reversed through the profit or loss. Financial liabilities s financial liabilities are initially measured at fair value, and are subsequently measured at amortised cost using the effective interest method. These liabilities are classified as current and non-current liabilities. (l) Interest in subsidiaries Interests in subsidiaries are stated at cost.

28 Page Summary of Significant Accounting Policies (Continued) (m) Employee benefits (i) Pension obligations has a defined benefit plan; the assets of which are generally held in separate trusteeadministered funds. The pension obligations are determined by periodic actuarial calculations. Typically defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. The asset or liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating the terms of the related pension liability. The current service cost of the defined benefit plan, recognised in the income statement in employee benefit expense, except where included in the cost of an asset, reflects the increase in the defined benefit obligation resulting from employee service in the current year, benefit changes curtailment and settlements. Past-service costs are recognised immediately in income. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the profit or loss. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions of the defined benefit obligation are charged or credited to equity in other comprehensive income in the period in which they arise. An overseas subsidiary operates a defined contribution plan. The subsidiary s contributions are based primarily on employee participation. Once the contributions have been paid, the subsidiary has no further legal or constructive obligations. The contributions are recognized as employee benefit expense when they are due. (ii) Other post-employment benefits also provides supplementary medical and life insurance benefits to qualifying employees upon retirement. The entitlement to these benefits is usually conditional on the employee remaining in service up to retirement age and the completion of a minimum service period. The expected costs of these benefits are accrued over the period of employment using the same accounting methodology as used for defined benefit pension plans. Actuarial gains and losses arising from experience adjustments, and changes in actuarial assumptions are charged or credited to equity in other comprehensive income. These obligations are valued annually by independent qualified actuaries. (iii) Termination benefits Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits.